31 Oct Vehicle Purchase Prior to Bankruptcy Filing Generates Chapter 13 Objections
In the Northern District of Georgia, recent car purchases can create problems in Chapter 13 cases. I currently represent a debtor who moved to Georgia within the last year following a divorce. My client has a son who lives in the midwest with my client’s ex-wife, and my client tries to visit his son every month or so by making a 12 hour drive whenever there is a long weekend.
Earlier this year, my client decided to purchase a more reliable vehicle than the four year old truck he had been driving. The replacement vehicle is a sedan that retails for about $25,000. In July of this year, I was retained and we filed a Chapter 13. Because of the recent purchase of the vehicle the trustee objected to confirmation and insists that we pay unsecured creditors at least 70% rather than the 15% provided for in our original plan.
My client was therefore faced with a plan payment of around $1,100 rather than $800. The $300 does not exist in his budget but the Chapter 13 trustee does not care. Our options are to accept the $1,100 payment or argue the case before the judge, who is known to be somewhat conservative. My client opted to go with the $1,100 payment and we will look at trying to modify the plan down the road if he is unable to find a second job.
The lesson – at least in the Northern District of Georgia, be very wary about filing for bankruptcy if you have recently purchased and financed a vehicle. For whatever reason, the trustees here have a problem with this type of vehicle purchase.
Jonathan Ginsberg, Esq.
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